European shares slip on tech selloff, French election jitters

European stocks fell on Monday as surging bond yields hit technology shares and volatility gripped French blue-chip stocks on forecasts of a tight race between President Emmanuel Macron and far-right challenger Marine Le Pen in the final round of the election.

The pan-European STOXX 600 index dropped 0.6%, led by a 2.2% slide in technology stocks. Among the regional indexes, Germany’s DAX slipped 0.6% and the UK’s FTSE 100 fell 0.7%.

France’s CAC 40 inched up 0.1% as partial results put Macron in first place after the first round of voting in the presidential election on Sunday, although Ifop pollsters predicted a tight runoff on April 24, with 51% for Macron and 49% for Le Pen.

French assets have underperformed recently as investors priced in a possibility of a victory for Le Pen, with markets uneasy about her agenda of protectionism, tax cuts and nationalisation. The CAC 40 has shed 1.6% so far in April, while the STOXX 600 is up 0.4%.

“The CAC 40 climbed modestly on relief that Macron won the first round of the presidential election with a slightly bigger lead than anticipated,” said Raffi Boyadjian, lead investment analyst at brokerage XM.

European shares clock weekly gains; focus shifts to French elections

“Although the race could be tighter, markets appear to be breathing a sigh of relief that Le Pen didn’t secure an even bigger share following her recent gains in the polls.”

The French Mid & Smallcap index rose 0.6%, while banks including Societe Generale, Credit Agricole and BNP Paribas also gained ground.

Societe Generale jumped 5.0% after it agreed to sell its stake in Rosbank and the Russian lender’s insurance subsidiaries.

Overall, euro zone banks and insurers gained as government bond yields jumped ahead of U.S. inflation data and a European Central Bank meeting later this week.

ECB policymakers are likely be caught between record high inflation and the economic hit from the war in Ukraine, although traders are ramping up bets of rate hikes this year.

Money markets are pricing in 70 basis points of rate hikes by the end of year compared with 65 basis points priced in on Friday.

Among other stocks, Finnish tyre maker Nokian Tyres slumped 15.5% after it said new sanctions imposed by the European Union on Russia will have a significant impact on its production.